The invention extends to all kinds of transportation modes and turns out to be particularly attractive for air transport. Therefore, the invention will be mainly described in connection with airline business.
A passenger itinerary can contain flights involving different carriers. Such an itinerary is usually designated “interlining” or “intercarrier” itinerary. Each flight of the itinerary is designated “segment”. A “programmed interlining” can be either “roundtrip interlining” when passenger decides to fly with a first airline from point A to point B, and returns with a second airline from point B to point A, or “connection interlining” when a first airline carries passenger from point A to point B, and a second airline carries passenger from point B to point C. Another type of interlining is called “flexibility interlining”: once the passenger bought his/her ticket for a travel on a given flight, (s)he has to possibility either to switch airline or to change his/her routing within the maximum allowed deviations.
Intercarrier systems offer worldwide connectivity, thus enabling passengers to travel efficiently and economically on international networks. As for the air transport, such intercarrier systems, designated interlining systems, are particularly well developed. The benefit for passengers is a multitude of fares to choose from, thus allowing the selection of the most preferred and economical route served by interlined carriers. Moreover, interlining systems provide flexibility and ease of use by allowing one single payment in one single currency for the whole multi-segment travel. The benefit for interlining carriers is to access each other's networks, thus providing to airline passengers a seamless travel to more than 4,000 airports around the globe.
When several carriers, also called airlines, are involved in providing the transportation service to the passenger, one carrier is chosen to be the validating carrier, also called “validating airline” for the ticket. This validating carrier is designated in the present application by the initials VC. The remaining carriers involved in the multi-segment travel are usually called “participating airlines” or “participating carriers” and are designated by the initials PC in the following.
The interlining systems could not operate efficiently unless the involved carriers have an agreed mechanism for managing data and monetary flows.
The problems addressed by the present invention will be better understood through an example explaining how the data and monetary flows are currently carried out in interlining.
Traditional travel agencies (TA) and other travel service providers use computerized travel search tools to handle the travel requests of their customers. To be able to offer this service, they are generally affiliated with a global distribution system (GDS) such as AMADEUS, a worldwide provider of technology solutions to the travel industry. GDSs have large proprietary computer systems allowing real-time access from all over the world to airline fares, prices, schedules and seating availabilities. They are thus offering the capability of booking flights through all sorts of travel service providers. This includes numerous online travel agencies (OLTA) that now offer their services directly to travelers over the Internet under the form of websites.
When a customer buys a ticket for an airline trip, the three steps usually followed by a travel agent (TA) connected to the GDS are the following:
Booking: this refers to checking for availability and actually making a booking: for example, the passenger wants to fly from Paris to Sydney on 1 Jan. 2008, and this trip involves two airlines, such as Air France (AF) on the CDG-SIN (Paris-Singapore) segment, and British Airways (BA) on the SIN-SYD (Singapore-Sydney) segment. The inventories of both airlines will be checked for availability and a booking for each segment will be done, thus decrementing the inventories of AF and BA.                Ticketing: a price tag is put on the trip (made with the help of Fare engines), and one airline (for example AF) is chosen to be the validating airline VC. The validating carrier collects the total revenue for the whole multi-segment travel.        Travel (coupon usage): the passenger flies on each segment of his/her trip, i.e. uses the service he/she has paid for. Then the total revenue has to be redistributed between all the involved carriers. The revenue share is calculated for each participating airline and is redistributed to them once the transportation service is provided.        
More precisely, the travel agency TA reports the sale on behalf of the validating airline VC to a system called Billing and Settlement Plan or Airline Reporting Corporation designated by BSP in the following. A BSP is basically a system designated to facilitate the reporting and remitting procedures. The BSP is then in charge of informing the validating airline VC of the sale and, usually, the BSP also performs the settlement between the travel agency and the validating airline.
It can easily be seen that, although the participating carrier knows about the booking due to the decrementation of its inventory, it has no idea of the revenue associated to the service that it is expected to provide. Indeed, the ticket sale was only reported to the validating carrier but not to the participating carrier. Participating airlines may be informed of the sale by subscribing to an additional service offered by companies like Airline Tariff Publishing Company ATPCO. However it is not guaranteed that all sales will be reported to these companies.
Determination of Revenue Share
Multilateral prorate agreements (MPA) are promoted by an international association called the International Air Transport Association IATA. These agreements rest on tariff coordination. However, settlement amounts are linked to the fare level, which leads to the situation where the participating carrier receives an amount that depends on the fare set by the validating airline.
Methodologies were set out for the sharing of revenue produced by interlining. For example, the simplest one is called straight Rate Prorate, which means in simple terms that revenue is shared on the basis of mileage flown. If one airline flies a passenger 800 miles and another 200 miles, the revenue share is 80/20. An extension of above method exists, named “provisos”, and is intended to compensate airlines operating in high cost environments, e.g. the higher cost of short distance sectors. This is particularly important for small airlines, which often perform shorter sector services than the large airlines. These provisos are exceptions to the straight rate proration methodology, filed by airlines, through which they stipulate a percentage of a base amount or rate as the share of the revenue they require for interlining on a particular sector.
The Multilateral Prorate Agreements also include a mechanism to ensure that provisos are not applied where they would result in an unreasonably low revenue share for any of the airlines involved.
However, nowadays multilateral interlining is often done through unilaterally set carrier-coded fares, and airlines are creating interline fares with little or no regard to the amount payable to the other airlines involved. This situation led to a flourishing development of bilateral agreements. Most interline revenue is now governed by Special Prorate Agreements, with nearly one out of every three airlines having more than 75% of their interline revenue covered on a bilateral basis.
Sampling
Due to the high cost of getting ticket information, running proration algorithms, producing and verifying the billings, the airlines have agreed on a workaround named sampling. The “sampling” method was based on the fact that re-keying manually the paper tickets inside the Revenue Accounting of the participating airline was heavily time-consuming, and the complexities of fares, proration and currency regulations increased the cost level of interline accounting. Basically, instead of billing the validating airlines on each coupon, the participating airlines agree on an exact evaluation of a percentage of the total flight coupons. Then they deduce the total value of all coupons based on that sample of the evaluated coupons.
Due to the huge variance in the coupon values, such method implies an inaccuracy that is not acceptable for an efficient management of airlines revenue.
Billing and Settlement of Revenue Sharing
In agreement with IATA procedures, interline transactions are accounted for by an invoice issued by the creditor airline (participating airline) charging the debtor airline (validating airline). Interline invoices for flight and excess baggage fares must be supported by the actual flight coupons, miscellaneous charge orders or other documents for the journey involved. No flight coupons need be present to support electronic ticket billings.
The IDEC (Interline Data Exchange Center) file is an electronic version of the hard-copy coupon listing and invoice. Each airline sends an invoice file to the IDEC processing centre at ATPCO, containing details of documents billed to other participants and receives from the centre a file containing details of its documents billed by the other participants. The IDEC eliminates the need for the receiving airline to duplicate the input of data already performed by the billing carrier.
Invoices sent by participating airlines are loaded by the validating airline as IDEC files designated billing files in the following. Incoming billed values are checked for fare and taxes against the provisional values already stored in the validating Revenue Accounting database, before accepting the billing. If billed value is higher than stored value, the coupon will be flagged for review and may be re-prorated. If the difference is still not acceptable, rejection will be initiated.
According to the IATA Revenue Accounting Manual, up to three rejections are possible. Then if no agreement is found, a correspondence between airlines may be initiated.
For example, if a participating carrier bills the validating carrier, the first rejection corresponds to the case where the validating carrier cannot accept original debit and re-debits the participating carrier. The second rejection occurs when the bill submitted by the validating carrier to the participating carrier (giving reason for debit) is rejected by the participating carrier. The third rejection occurs when the bill submitted by participating carrier to validating carrier as second rejection is rejected by the validating carrier. Each rejection must be billed not later than six months after date of receipt of original billing, or of previous rejection. This current process may last up to two years after flight departure.
Such process implies many drawbacks.
Indeed, reaching an agreement may take a very long time. Yet, the efficiency of the financial operations management is critical to the profitability of all airlines. Thus, delaying the time of being certain of the revenue associated to a service already provided prevents any efficient management.
Moreover, an efficient financial management would imply to foresee as soon as possible the revenue that is expected to be earned from coupon corresponding to a service which has not been provided yet.
Besides, such dispute procedures necessitate tedious actions handled by employees and turns out to be time and money consuming for airlines.
A number of solutions have been developed to try to diminish these significant drawbacks. The main solutions are explained in the following.
“First and Final” Solution
In order to speed up the above described procedure, a process called “First and Final Billing and Settlement” has been proposed to the airlines. The objective is that the processes used to evaluate interline settlement amounts are such that the carrier being billed has sufficient confidence to accept the invoice without further verification.
This process provides carriers with prorated values calculated with a public proration engine to be chosen amongst two engines operated by neutral parties. When the billing is conform to the values sent as output by the neutral prorating engine, the bill is flagged “First and Final conform”, and the carriers do not need to verify further the billing values.
However, only one carrier determines the choice of the public proration engine. Thus, such agreement is rather imposed on the other carrier. Besides, this method prevents auditing of the fare amount. Thus, such solution limits the carriers' independence.
Agreements Within Alliances
Another attempt to simplify these procedures and to reduce the time spent in prorating the tickets and in verifying the billings was done by internal alliance agreements.
When both validating and participating airlines belong to an alliance applying this method, the participating airline initiates a “request-response” process. Instead of running the proration algorithm to assess the coupon value, the participating airline asks the validating airline how much the coupon is worth Then the billing is done, without further verification, based on this value.
Such solution enables significant time savings but does imply that the validating airline imposes its own value without any possibility for the other airline to dispute it. Therefore, such solution turns out to be convenient only between closely linked airlines but cannot be implemented in large scale with many competitors, since it removes the independence of the participating airline.
Both methods exposed above reduce the disputes by imposing the value calculated by an airline (usually the validating) over the other airline (usually the participating).
Therefore, there exists a significant need to provide a method enabling to limit at least some of the above-mentioned drawbacks of the existing methods. In particular, it would be very profitable for airlines to be provided with a method that significantly speeds up the procedure for reaching an agreement regarding coupon prorated value, without having recourse to restrictive solutions leading to independence abandonment.
It is another object of the invention to reduce the number of dispute cases without increasing administrative charges.
A further object of the invention is to know earlier the revenue expected from a given coupon before the service corresponding to this coupon is actually provided.
It is a further object of the invention to reduce the duration of dispute.